Continued weakness out of China and the expectations of weak earnings reports this quarter sent the majors lower for a second straight day. Today’s losses did exceed yesterday’s losses, as all three majors pushed well below support levels on a decent spike in volatility.
We were expecting the markets to move lower this week; however, volatility was much larger than originally anticipated. The markets could look to make a temporary bottom over the next few sessions. With the increase in volatility, we just need to see a spike in volume correlated with a move lower, or capitulation. Today’s action did show signs of capitulation, but we will need to see a strong bounce to confirm.
There have been some decent bear plays out there and, even after a bounce, we could see more. Try not to chase any bear trades here as there will be better opportunities after the markets correct or bounce.
Have a good night,
Maverick Trading
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